N.Shanmugavel, CHENNAI V. ITO, CHENNAI

ITA 713/CHNY/2015

• Counselvise Citation: 71321714 RSA 2015
• Duration Of Justice: 4 month(s) 13 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 21-08-2015
• Appeal Filed By: Assessee
• Bench Allotted: C
• Next Hearing Date: 22-06-2015
• Assessment Year: 2009-2010
• Appeal Filed On: 07-04-2015
• Court: TRIBUNAL
• Department Lawyers: A V SREEKANTH
• Assessee Lawyers: K RAVI
• Keywords: Revised return
• Section: 234B; 147

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL C BENCH, CHENNAI . . . , . !' ,$ % BEFORE SHRI N.R.S. GANESAN, JUDICIAL MEMBER AND SHRI A. MOHAN ALANKAMONY, ACCOUNTANT MEMBER ITA NO.713/MDS/2015 & '& / ASSESSMENT YEAR : 2009-10 SHRI N. SHANMUGAVEL, NO.10, 1/17, SESHACHALA GRAMANI STREET, KALADIPET, CHENNAI - 600 019. PAN : AMZPS 2880 H V. THE INCOME TAX OFFICER, NON CORPORATE WARD VI(2), CHENNAI. ( APPELLANT) ( RESPONDENT) APPELLANT BY :SHRI K. RAVI, ADVOCATE R ESPONDENT BY : SHRI A.V.SREEKANTH, JCIT, D.R * +,$ / DATE OF HEARING : 22.06.2015 -!' +,$ / DATE OF PRONOUNCEMENT : 21.08.2015 / O R D E R PER A.MOHAN ALANKAMONY , ACCOUNTANT MEMBER:- THIS APPEAL IS FILED BY THE ASSESSEE, AGGRIEVED B Y THE ORDER OF THE LEARNED COMMISSIONER OF INCOME TAX(A)-5, CHENNAI DA TED 13.03.2015 2 ITA NO.713/MDS/2015 IN ITA NO.285/13-14 PASSED UNDER SEC.143(3) READ W ITH SEC. 147 & 250 OF THE ACT. 2. THE ASSESSEE HAS RAISED SEVEN ELABORATE GROUNDS IN ITS APPEAL, HOWEVER THE CRUXES OF THE ISSUES ARE CONCISED HEREI N BELOW FOR ADJUDICATION:- (I) THE LD. CIT (A) HAD ERRED IN SUSTAINING THE AD DITION MADE BY THE ASSESSING OFFICER BY ADDING THE GROSS INCOME OFFERE D BY THE ASSESSEE WITHOUT TAKING INTO CONSIDERATION OF THE ELIGIBLE E XPENSES INCURRED FOR EARNING SUCH INCOME. (II) THE LD. CIT (A) HAD ERRED IN SUSTAINING THE L EVY OF INTEREST U/S.234A, 234B & 234C OF THE ACT. 3. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSES SEE IS AN INDIVIDUAL, ENGAGED IN THE BUSINESS OF CIVIL CONTRACT IN THE NA ME AND STYLE OF M/S.S.VELLAMAL, FILED HIS RETURN OF INCOME ON 15.09 .2009 FOR THE ASSESSMENT YEAR 2009-10 ADMITTING HIS TOTAL INCOME AS ` 3,36,860/-. SUBSEQUENTLY THE CASE WAS OPENED U/S.147 OF THE ACT AND A NOTICE U/S.148 OF THE ACT WAS ISSUED 08.11.2011. DURING TH E COURSE OF ASSESSMENT PROCEEDINGS, IT WAS OBSERVED BY THE LD. ASSESSING OFFICER THAT THE GROSS RECEIPT ADMITTED IN THE RETURN OF IN COME WAS AS UNDER:- SL. NO. PARTICULARS AMOUNT ( `) 3 ITA NO.713/MDS/2015 1 CONTRACT RECEIPT FROM CHENNAI PORT TRUST 21,31,698 2 CONTRACT RECEIPT FROM SOUTHERN RAILWAY 24,27,305 TOTAL 45,59,003 HOWEVER AS PER 26AS STATEMENT IT WAS REVEALED THAT THE ASSESSEES GROSS RECEIPTS WERE:- SL. NO. PARTICULARS AMOUNT ( ` ) 1 CONTRACT RECEIPT FROM CHENNAI PORT TRUST 44,29,50 4 2 CONTRACT RECEIPT FROM SOUTHERN RAILWAY 24,27,305 3 CONTRACT RECEIPT FROM FISHING HARBOR MANAGEMENT COMMITTEE 23,31,819 TOTAL 91,88,628 THUS, THERE WAS A DIFFERENCE BETWEEN THE ADMITTED C ONTRACT RECEIPTS FROM CHENNAI PORT TRUST AND AS REFLECTED IN THE FOR M 26AS AMOUNTING TO ` 22,97,806/- ( ` 44,29,504 ` 21,31,698) & ` 23,31,819/- BEING THE GROSS RECEIPTS FROM SOUTHERN RAILWAY NOT DISCLOSED IN THE RETURN OF INCOME. THE ASSESSEE ADMITTED THE OMITTED CONTRACT RECEIPTS AS ` 33,87,317/- IN THE REVISED RETURN FILED ON 02.11.2011 AND WORKED O UT THE SHORTFALL OF PROFIT AT 18.93% ON ` 33,87,317/- WHICH WORKED OUT TO ` 6,41,219/-. THE ASSESSEE ALSO SUBMITTED THE DETAILS OF THE EXPENDIT URE INCURRED ON THE ADDITIONAL TURNOVER WHICH WAS OMITTED TO BE DISCLOS ED IN THE RETURN OF INCOME. HOWEVER THE LD. ASSESSING OFFICER REJECTED THE WORKING OF THE ASSESSEE AND ASSESSED THE TOTAL INCOME OF THE ASSES SEE AT ` 40,35,708/- AS AGAINST RS. 4,36,855 DISCLOSED IN TH E RETURN OF INCOME. ON APPEAL, THE LD. CIT (A) AGREED WITH THE WORKING OF THE LD. ASSESSING 4 ITA NO.713/MDS/2015 OFFICER BY REJECTING THE SUBMISSIONS OF THE ASSESSE E AND CONFIRMED HIS ORDER. WHILE DOING SO, HE OBSERVED AS UNDER:- 4.4 THE ASSESSEE IS NOT ABLE TO CONFIRM WHETHER TH E ABOVE EXPENDITURE WAS INCURRED IN RESPECT OF ALL CONTRACTS EXECUTED B Y HIM DURING THE AY 2009-10 OR NOT. IF IT IS SO, WHY THE ENTIRE EXPENDI TURE WAS NOT CLAIMED IN THE ORIGINAL RETURN FILED. THERE IS NO BIFURCATION FURNISHED FOR THE EXPENDITURE INCURRED ON CHENNAI PORT TRUST WORK, RA ILWAY WORK AND FISHING HARBOUR MANAGEMENT COMMITTEE WORK. THE BILL S AVAILABLE IN THE MISCELLANEOUS RECORDS FOR AY 2009-10 DO NOT REVEAL ANY INFORMATION ABOUT PLACE OF SITE, FOR WHICH WORK THE MATERIALS ARE SUP PLIED, RECEIPTS GIVEN BY THE THIRD PARTIES DO NOT REVEAL THE SPECIFIC WORK, ETC. IT SEEMS THAT NO REPORT U/S 44AB OF THE I.T. ACT WAS FILED EITHER WITH THE ORIGINAL RETURN OR REVISED RETURN. IN THE ABSENCE OF PROPER WORKING TO ARRIVE AT THE CORRECT INCOME, THE ARGUMENTS AND CONTENTIONS OF THE ASSESSEE ARE R EJECTED DEVOID OF MERIT. THE METHOD ADOPTED BY THE AO SEEMS TO BE COR RECT. HE TOOK INTO ACCOUNT THE CORRECTION STATEMENT ISSUED BY CHENNAI PORT TRUST, REDUCED THE INCOME OFFERED FOR AY 2008-09 AND DELETED THE D OUBLE ENTRIES POINTED OUT BY THE CHENNAL PORT TRUST. I DO NOT FIND ANY ER ROR IN THE COMPUTATION MADE BY THE ASSESSING OFFICER WHILE PASSING THE ASS ESSMENT ORDER. THE CLAIM THAT THE ASSESSEE INCURRED MORE EXPENDITURE T HAN WHAT IS CLAIMED IN THE ORIGINAL RETURN IS NOT PROPERLY EXPLAINED WITH PROPER EVIDENCES EITHER BEFORE THE AO, AT THE TIME OF REMAND REPORT OR BEFO RE THE UNDERSIGNED. IN THE CIRCUMSTANCES, I DECLINE TO INTERFERE IN THE OR DER OF THE ASSESSING OFFICER. ALL THE GROUNDS OF APPEAL RAISED ARE REJEC TED IN TOTO. 4. LD. A.R. SUBMITTED BEFORE US THAT THE ENTI RE DISCREPANCY HAS OCCURRED DUE TO THE WRONG ADOPTION OF CONTRACT PAYM ENT/TURNOVER FOR THE RELEVANT ASSESSMENT YEAR BY THE TAX-DETECTOR IN FOR M 26AS AGAINST WHICH TAX IS DEDUCTED. THE LD. A.R. SUBMITTED THAT THIS MISTAKE HAD OCCURRED BEYOND THE CONTROL OF THE ASSESSEE WHO HAD CORRECTLY DISCLOSED THE CONTRACT RECEIPTS IN HIS BOOKS OF ACC OUNTS. LD. A.R. FURTHER ARGUED BY STATING THAT THE ASSESSEE HAD AGREED TO T HE TURNOVER STATED IN THE FORM 26AS IN ORDER TO SIMPLIFY THE ASSESSMENT P ROCEEDINGS, HOWEVER HE HAD RIGHTFULLY CLAIMED THE EXPENDITURE I NCURRED TOWARDS THE ADDITIONAL CONTRACT RECEIPTS ADAPTED BY THE LD. ASS ESSING OFFICER IN 5 ITA NO.713/MDS/2015 PARITY WITH FROM 26AS. IT WAS THEREFORE PLEADED TH AT THE EXPENDITURE CLAIMED BY THE ASSESSEE MAY BE ALLOWED AS DEDUCTION FOR THE RELEVANT ASSESSMENT YEAR. LD. D.R STRONGLY RELIED ON THE OR DERS OF THE REVENUE AND ARGUED IN SUPPORT OF THE SAME. 5. WE HAVE HEARD BOTH THE PARTIES AND CAREFULLY PE RUSED THE MATERIALS AVAILABLE ON RECORD. IT IS APPARENT FROM THE FACTS OF THE CASE THAT THE ASSESSEE HAD AGREED FOR ADDITION WITH RESP ECT TO THE OMITTED CONTRACT RECEIPTS BEING THE DIFFERENCE BETWEEN THE CONTRACT RECEIPTS FROM CHENNAI PORT TRUST DISCLOSED IN THE RETURN OF INCOM E AND AS REFLECTED IN THE FORM 26AS AMOUNTING TO ` 22,97,806/- ( ` 44,29,504 ` 21,31,698) & ` 23,31,819/- BEING THE GROSS RECEIPTS FROM SOUTHER N RAILWAY NOT DISCLOSED IN THE RETURN OF INCOME BUT STATED IN FOR M 26AS. HOWEVER, BEFORE THE LD. ASSESSING OFFICER, THE ASSESSEE HAS ADMITTED ONLY ` 33,87,317/- AS THE AMOUNT OF TURNOVER OMITTED TO B E DISCLOSED IN THE RETURN OF INCOME THOUGH THE AGGREGATE OF OMISSIONS WORKS OUT TO ` 46,29,625 /- ( ` 22,97,806/- + ` 23,31,819/-). THEREFORE, WE HEREBY CONFIRM THE OMITTED TURNOVER TO BE TAKEN INTO ACCOUNT AT ` 46,29,625 /- INSTEAD OF ` 33,87,317/- AGREED BY THE ASSESSEE. FURTHER AS CLA IMED BY THE ASSESSEE, THE EXPENDITURE INCURRED TOWARDS EARNING THE ADDITIONAL TURNOVER OF ` 46,29,625/- HAS TO BE ALLOWED WHILE WORKING OUT THE INCOME EARNED ON THE OMITTED TURNOVER. THE LD. CIT (A) HA D DISALLOWED THE 6 ITA NO.713/MDS/2015 EXPENDITURE BECAUSE THE BILLS AND VOUCHERS PRODUCED BY THE ASSESSEE COULD NOT BE CORRECTLY CORRELATED TO THE ADDITIONAL TURNOVER. IN THESE CIRCUMSTANCES, WE ARE OF THE CONSIDERED VIEW THAT T HE NET PROFIT RATIO OF 18.93% WORKED OUT BY THE ASSESSEE FOR THE DECLARED TURNOVER MAY BE ADOPTED FOR THE OMITTED TURNOVER AFTER MAKING ADJUS TMENTS FOR THE FIXED OVERHEADS THAT IS ALREADY ABSORBED IN THE INITIAL W ORKING OF NET PROFIT AT 18.93% AND THEREBY MODIFYING THE NET PROFIT RATIO T O 20%. THUS, WE HEREBY SUSTAIN THE ADDITION OF ` 9,25,925/- ( ` 46,29,625 /- X 20%) TO MEET THE END OF JUSTICE. IT IS ORDERED ACCORDINGLY. 6. LEVY OF INTEREST U/S.234A, 234B & 234C OF THE AC T. SINCE LEVY OF INTEREST U/S.234A, 234B & 234C OF THE ACT ARE MANDATORY, THIS GROUND RAISED BY THE ASSESSEE DISMI SSED AS SUCH. 7. IN THE RESULT, THE APPEAL OF ASSESSEE IS PARTLY ALLOWED AS INDICATED HEREINABOVE. ORDER PRONOUNCED ON 21 ST AUGUST, 2015 AT CHENNAI. SD/- SD/- ( . . . ) ( N.R.S.GANESAN ) ( . ) (A.MOHAN ALANKAMONY) JUDICIAL MEMBER ACCOUNTANT MEMBER /CHENNAI, . /DATED, THE 21 ST AUGUST, 2015. K S SUNDARAM + /,01 21', /COPY TO: 1. PETITIONER 4. * 3, /CIT 2. /456 /RESPONDENT 5. 17 /, /DR 3. * 3, () /CIT(A) 6. 9& : /GF